Saturday, January 22, 2011

Publisher and author: Ali's company publishes various types of self-help books. Personally, Ali has written more than 30 books. He aptly advises, "Read as many books as you can about money matters. You will lead richer and happier life."

How many books have you written?

More than 30. They are all about money. Four on property investment – ‘How to become property millionaire’, ‘How to become millionaire landlord’, ‘Winning at property auctions’ and ‘How to pay off your house loan within five years.’ I also publish books by other authors. There’s one about ‘40 questions you want to ask your lawyer about property investment’, another about ‘millionaire real estate guide for beginners’ and also one about property auction.

When do you plan to launch your next book?

No target date yet. It never ends because the moment I finish one book, I start on another (laughs). Some people play golf. Some fish. Some scuba dive. I write. I am happy doing it. I can do it for days on end. It’s not work for me. We are always on the lookout for authors. It doesn’t have to be about money. I publish books on health, parenting, cats, and so on.

Any additional advice to share with our readers?

Read as many books as you can about money matters. You will lead richer and happier life. You need to learn and read because the world is constantly changing. Many of people are innocent and they don’t know what hit them.

What if these owners refinance to invest because they don’t have enough cash?

In that case, they could refinance but they have to be careful with the loan’s terms.

Do elaborate on “loan terms”.

This is how it should be. If the environment is of low interest rate with rising property prices, then take as much loan as you can. This is because you can multiply your net worth very fast, assuming that you can pay every month. That formula of taking as much loan as you can and buying as many as you can was correct one or two years ago. The environment has changed and will continue to do so. Interest rates have increased. There’s the LTV (loan-to-value) ratio of 70% for third property onwards. There are more things to come, some of which you and I have never seen or faced before.

Anybody with monster mortgages will be in serious pain. So back to your question of “If you have almost paid off but do not have the capital to buy other properties, should he/she refinance?”. The answer is yes, but don’t take too much and more importantly cap the interest rate. Don’t use the current fluctuating rate, based on BLR (base lending rate). It won’t be low forever. Just to share, I have one RM1.5 million loan. The rise of 75 basis points in 2010 has caused my payments to rise by RM500. This is only 75 basis points. Can you imagine if the interest rates rise by 2 or 3%? I also will feel the pain.

Do you go for residential or commercial properties?

For me, it has been residential all the while − both condos and landed. I know that the big money is in commercial properties – higher rentals and capital gains. You need to have some knowledge of the commercial market because if you choose incorrectly, it could be empty for years. So you must really do your homework. But where there is danger, there are also opportunities. Now, I am looking at below market value properties. There are a lot of options now.

"I do not only teach people on how to be rich. I teach people how to get rich, how to live rich, how to stay rich and how to die rich,"says Ali.

When did you start investing in auction properties?

Before that, I was buying from developers. Now, my staff cuts and highlights the interesting auction properties. I can’t take them all. The quantity has increased significantly.

Are these auction properties in good areas?

Having said that, 95% are not interesting to me. But lately, the quality in good areas has also increased. In fact, I don’t even do this full time. I only spend 10 minutes every morning to look at it and go for the interesting ones. I share some with my clients.

Do you concentrate in certain residential areas?

I go for PJ. It saves me a lot of work because I am familiar with the area, the supply and demand, and the prices.

Do you do no-money-down strategies?

Yes, the whole concept is find one below market.

Are no-money-down strategies very difficult to apply with the LTV ratio of 70%?

Yes, it is hard, but it can be done. I think the LTV of 70% is good for most people. Otherwise, they might end up taking too much loans, which they can afford now but as situation changes, they might not be able to afford it. So this might save their life.

What are the common myths about auction properties?

Despite the quantity of auction properties, I would say that 90% are not appropriate for investors. One, incorrect locations. Two, nature of auctions – the first auction might be market value, therefore it is not appropriate.

For auctions, you must do homework. Actually, in all investments you must do your homework. Whenever there are opportunities to make lots of money, it also comes with opportunities to lose a lot of money, like gold. The price of gold is rising. I put much of my money into gold in the last couple of years, which I am happy about. At the same time, gold is also full of traps. If you buy the incorrect form of gold, you may not benefit even if the price is rising.

What do you mean by “incorrect form of gold”?

Jewellery. Is it gold? Yes it is. When you buy from shops, you pay more to cover for the workmanship and profit. In that case, you already overpay, already in the negative. When you sell back to the shop, you cannot sell at the same price you bought. At best, they will buy it back at market value. They will usually buy at market value, minus 25%. That’s two negatives. Three, you can only sell back to the same shop you buy from. Fourth, if you do not have the receipt, they won’t take it back and most people don’t know where they kept the receipt. Fifth, when you go back to the shop, you cannot get cash, but instead you can trade it in for another piece of jewellery. So, five negatives. From an investment point of view, it is useless. So despite the rising price of gold, you may not benefit from it. That’s one of the traps. To know more, you can read my book – Get Into Gold.

Do you conduct a lot of seminars?

About one in every three months.

What are your seminars about?

All about money − property investments, investing in gold and information marketing.

Are they one-day seminars?

Yes, one day. I will cover the critical success factors for property investments. There are a lot of things to talk about properties. What you want to know is the critical success factors. One of them is buying below market value. Then you have to know the three elements of property investment which is physical, financial, and legal rights and obligations.

Financing is extremely important. Most landlords don’t make money from investments. So I share on how they can reduce these risks significantly. I share on how to reduce work, automate processes and system of doing this. An average investor takes loans that amount to a few hundred thousand, so they cannot afford to get it wrong. What more if the loans are in the millions. I am not only a businessman. I am also a qualified financial planner. So I look from both sides. I feel concerned for my fellow Malaysians when they lose their houses. When they search for mortgages, they only look at one thing, the lowest interest rate at that point in time.

What I do now is the personal coaching programme.

What are the terms and conditions that borrowers should take note of?

Flexibility of loan.

Are you referring to types of loans?

No, beyond that. The actual terms and conditions of the individual loan. For example, most banks have a lock-in period. That’s fine, but on top of that, some loans don’t allow you to pay extra. For some, you can pay more, but the extra payment doesn’t reduce the principal amount, which defeats the purpose. Some of them allow you to pay extra, but it must be in multiples of RM1,000, for example. I am not saying that interest rate is not important. But that’s just one of the criteria.

How much is the personal coaching programme?

The personal coaching programme is RM590 per month. When you sign up, you have to pay for five months in advance. After they sign up and meet me personally, we have one tele-seminar (seminar via telephone) for one hour per month. I will talk about specific subjects, for example, auction, estate planning, investing in gold, and so on. It is a conference call where all members will call in and listen. From time to time, I will also invite industry experts to talk. It is just like a seminar but through the phone. This is my inner circle coaching programme. Members can choose to continue after five months if they want to.

For urgent matters, they can contact me. They also get a free book every month and every four months, we have a mastermind meeting, where the whole group comes together and meet here (Azizi Ali’s office in Kelana Jaya). I do not only teach people on how to be rich. I teach people how to get rich, how to live rich, how to stay rich and how to die rich.

Most of the information that I share, I am doing it myself. So I know that it brings results. For example, investing in gold, I did the research and then I share. It is not just theory.

Business savvy: Although Azizi Ali is largely known as a property coach and investor, he is also a pilot, publisher, author and qualified financial planner.

Azizi Ali, 48, is as versatile as it gets. A pilot, publisher, property investor and coach, author, qualified financial planner – or to put it succinctly an all-round entrepreneur. A voracious reader (he reads three books in a week!), unsurprisingly Ali credits his success to his healthy appetite for knowledge. He quips, “The more books on money matters that you read, the wealthier you will be. This is not just a tagline. It is the truth. I wish somebody had told me that 30 years ago!”

Most of us would’ve heard of Confucius’s quote, Choose a job you love and you will never have to work for a day in your life. Ali is a fine example of “living” that advise. His five-figure income is derived from his passion. As he puts it, he does not have to work but finds no reason to retire from doing what he loves. He says, “I only do things I like in my life. I like to fly. I like to write. I like to speak. I like business.”

StarProperty.my chats with the high-flying Ali about his passion for money matters, his successes and a music business that cost him RM100,000.

Tell us about yourself. How did you start in property investment?

When I started my career, despite being hardworking, I only made little money. I did not have any financial knowledge and was broke most of the time. This went on for about four years. At that time, I was about 20 or 21 years old. I started my career very young. I am a pilot by profession.

Are you still a pilot today?

Yes. After a while, I wondered if I will be living hand-to-mouth until retirement. I wondered what was wrong with me. Even my colleagues then, even if they were older and married, and making the same amount as me, they were doing okay but I was broke. So something is wrong. I realised what was wrong was my knowledge of financial matters, which was practically non-existent. So I started educating myself on financial matters. The intention was not to become a millionaire, but so that I would not be broke again. This was in 1985, where there were not as many books on money matters. So to educate myself, I did what most people would do. I asked people who I thought were experts at the time. They gave advice but they were not the real experts. Though their advice was not all wrong, but it was incomplete.

As I educated myself, I began to have some money. I wasn’t broke anymore, which was great. I read more books and asked more people. But after a while, I realised that some of the advice given was opposite of what the books said. After a while, I leaned more on books. I was repeating the formula of reading more books and I knew it was working and have enough money for investments. So that’s why I tell people today, the more books on money matters you read, the wealthier you will be. This is not just a tagline. It is the truth. I wish somebody had told me that 30 years ago. I would be a lot richer.

The reality is that much of the information out there is biased. For example, insurance. Who do you ask information from? Probably insurance agents. That’s why the information is biased. So people don’t make as good a decision as it could be. That’s why you have to get different points of view.

I started investing when I was about 25 or 26 years old. Like most people, the first place was stock market. I started reading books on stocks which helped a little. Like most people, I made a little money, and lost a little money. I did a lot of work. Most people rely on tips. All in all, I suppose that I did not make money from the stock market. After a while, I started investing in properties, and then business.

My first business was a music shop, selling cassettes and CDs, in 1990. In my eagerness to become an entrepreneur, I did research, but too little. In the end, after three or four years I lost over RM100,000. Now I can laugh about it. At that time, it wasn’t funny (laughs).

Why did your music business fail to take off?

Actually, if I had done proper research, I would not open the shop. I was blinded by the light of business, and was so eager that I jumped into it. There were a lot of things that I didn’t know about before I started. The margins were very low, less than 30% − which means that I had to sell a lot to pay the rent. Plus, cassettes are so small and hence, easily stolen.

What did you do after that?

The good thing is that even though the business did not work, my personal finance was better.

You were doing other things at the same time?

Yes, just like now. Although my name is synonymous with property, it is just a small part of my business. We have to put the money from business somewhere. One of it is properties. It is very good but it’s not the only game in town. At the same time, my main business is still business. Property is just a small part. See, a couple of years ago, I bought a house for RM800,000. When it was completed, I sold it for RM1.1 million. So the profit was RM300,000 and at that time, RPGT (real property gains tax) was still at 30%. All in all, my profit was RM200,000 after two years. I suppose that’s not too bad. But in business, I can make RM200,000 per month. So where should I be concentrating on? It’s a no-brainer.

How old were you then?

I started my publishing business when I was about 37 or 38 years old.

When did you start investing in properties?

I bought a house for own stay in 1997. Property investment for rentals started in 1995.

What was your first investment?

Condominium, which I rented out. At that time, my formula is for rental. I have sold most of it.

What’s your property portfolio now?

Not a lot. I sold most of it in 2010. The net worth is maybe six million.

Why did you sell most of your properties? Is it because of the “property bubble”?

Yes. I was reading a few books that explained about the US crash. Some reasons was the low interest rate, user-friendly mortgage, questionable borrowers and current owners refinancing. I shuddered when I read it. It is exactly like in Malaysia. That’s why I wrote the article, “The US property crash, could it happen here?”. For most current owners, even if their house is almost paid off, they refinance to get the money to invest in other properties

Tuesday, January 18, 2011

PETALING JAYA: There must be controls and proper tests in place to ensure those taking pilot courses meet the stringent standards required by airlines, said Malaysia Airlines operations director Capt Azharuddin Osman.

“The aviation industry in Malaysia is small with only two major airlines. If not properly controlled we will have an over supply of ‘under-qualified’ pilots,” he said, adding that MAS currently had 1,400 pilots.

On average, MAS recruited 100 cadets into its full scholarship cadet programme every year. For every 16 that apply, only one gets in.

Capt Azharuddin said pilots had to clock in at least 4,000 hours to captain a narrow body aircraft like a Boeing 737, which could take between eight to 10 years before progressing to a widebody aircraft.

“With the right qualifications, their chances of being employed by an airline would be better,” he said.

AirAsia had about 120 recruits last year.

Firefly’s marketing and communications head Angelina Corrina Fernandez said the frequency of the intake for new pilots depended on their network expansion.

PETALING JAYA: The road to becoming a commercial airline pilot is tough, as any cadet pilot will tell you.

Yet, many of the unemployed pilots are confident of landing a job, even if it means waiting for more than a year.

Mohd Zakaria, 24, said his batch of 24 students enrolled in 2008 but only one got a job.

“The industry needs a lot of pilots and finding a job also has to do with the timing of the intake.

“If you graduate and just missed the job intake, you would probably have to wait a year or so before the next window opens.

“But we are confident the industry will continue to grow.

“The risk is there and the competition is stiff.

“That is why we have to shine and stand out from the rest,” he said.

He added that he wanted to become a commercial pilot and did not want to join a flying club.

A 22-year-old cadet pilot said he waited almost a year before landing an interview with a local airline company with no guarantee of a job.

“I had about 20 students in my batch who graduated a year ago but only two or three landed jobs.

“It’s a long process, from the interview to qualifying as a passenger airline pilot,” he said.

Pilot, radio deejay and TV personality Johan Farid Khairuddin, 30, said the misperception among young graduates was that they would land a job with an airline immediately after graduating from flying school.

“Some think that you must fly with a major airline to become a pilot.

“But there are other jobs out there, such as flying instructors or being part of a flying tour.

“Some young pilots have told me they are not employed because they want a major airline opportunity,” he said.

Johan Farid, who has been flying since 2004, said there was a shortage of captains in the industry but a surplus of fresh cadet pilots and flying schools.

A 29-year-old pilot expressed surprise over the high number of flying schools in the country.

“The supply now definitely outweighs the demand.

“It was easier to get jobs several years ago when there were not many graduates or schools,” he said.

PETALING JAYA: Up to 500 licensed junior pilots in Malaysia have not been able to take to the skies in the last two years. There are just not enough jobs for them.

The number of flying schools have quadrupled from two about three years ago to eight now, resulting in an oversupply of fresh pilots vying for the limited number of positions as airline trainee pilots.

While the schools produced between 300 and 400 pilots annually in the last five years, their total intake for a year can reach up to 800, given that the course takes between 18 months and two years.

They would graduate with 200 hours under their belt, enabling them to only fly small aircrafts below 5,700kg.

But this does not qualify them to fly for an airline, which would require at least 1,500 flight hours and further intensive type training and stringent tests. Only then would they qualify for an Airline Transport Pilot Licence (ATPL).

Last year, the country’s two major airlines – Malaysia Airlines Bhd and AirAsia – each hired only an average of 100 graduates each for their airline pilot training programme.

The Department of Civil Aviation’s (DCA) flight operations director Capt Datuk Yahaya Abdul Rahman said that about 70% of the 400 fresh graduate pilots would be employed by local airlines.

Capt Yahaya said that previously, most students were sponsored by airlines which would then recruit them upon graduation.

“These days, half of them are private students whose parents have paid for their course.”

He agreed that presently, the number of pilots graduating from flying schools was growing faster than the recruitments.

“From 2005 to 2009, a total of 1,513 locals and 110 foreigners graduated from the flying schools. The number has been increasing every year,” he said.

Back in the 1990s, Malaysia had only one flying school in Malacca, which produced 70 pilots annually.

Capt Yahaya, however, dispelled speculation that the oversupply was due to local airlines preferring to hire foreign pilots.

“Local airlines need to keep a small number of foreign captains with at least 15 to 20 years’ or 5,000 flying hours’ experience.

“Fresh pilots are usually taken in as co-pilots. They will later be upgraded to senior co-pilots and then captains when they have achieved the necessary flying hours.”

Given the rapid growth of the airline industry and continuous expansion of major local industry players, he believed that demand for pilots was on the rise.

He encouraged fresh pilots who are jobless to join DCA’s three-month instructor’s programme to keep their flying skills intact.

Tuesday, January 11, 2011

An AirAsia Airbus A320-200, registration 9M-AHH performing flight AK-5218 from Kuala Lumpur to Kuching (Malaysia) with 124 passengers, landed on Kuching's runway 25 in heavy rain around 21:10L (13:10Z) but skidded to the right and came to a stand still off the paved surface between taxiways A1 and A2. No injuries occurred.

The runway was closed except for departures from runway 25 requiring aircraft to taxi onto the runway at taxiway A2 and backtrack 25. The available takeoff distance is currently reduced from 3840 to 2490 meters. The aircraft is expected to be moved off the runway area in the morning of Jan 11th.

AirAsia as well as other airlines operating into Kuching have cancelled all flights in the meantime.